Executive Summary of Evaluation
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Outcome Evaluation on PT South Pacific Viscose Line IV Project17 December 2013
Hulman Soaloon, IFC, hsoaloon@ifc.org
3 July 2014
Hulman Soaloon, IFC, hsoaloon@ifc.org
2Modifications from original Executive Summary

Without Modification

Executive Summary Approved for public
disclosure by (name) on (date)

Ian Colley, PT South Pacific Viscose, 2 July 2014; Anna Hidalgo,IFC-ECRIO, AHidalgo@worldbankgroup.org

BackgroundPT. South Pacific Viscose (SPV) is one of the world’s largest low-cost producers of high quality viscose
staple fiber, a biodegradable fiber that is traditionally used as a cotton substitute for its superior ability toabsorb moisture. The Company is located in Purwakarta, Indonesia. In 2008, IFC provided financing tosupport SPV’s production capacity expansion (Line IV) and improvement in resource recovery and energy
efficiency. EAP Results Measurement team through an in-depth study conducted in August 2013 foundthat the Project had achieved several positive outcomes on the local economy and private sector
development.

Analysis
The Project benefitted SPV’s two main suppliers through an increase in raw material procurement. Theirsales to SPV more than doubled while their total sales increased by 23 percent and 15 percent
respectively. Seeing the increasing trend, consequently they invested in production capacity expansion.
The Project also benefitted SPV’s main customers, namely, the yarn manufacturers, through an increasein availability of good quality viscose fiber. Two main customers of SPV tripled their purchase from SPV
due to a positive market response. Consequently they were able to expand production capacity andimprove productivity. As more yarns were produced, sales to export market and domestic fabricmanufacturers also improved. This indicates that fabric manufacturers, both domestic and overseas
responded positively to an increase of availability of yarns produced from SPV’s fibers.
The Project also created positive impact on employment, directly and indirectly. It created 250 additional
direct employment positions and 9500 temporary jobs during the construction. Due to capacity expansion,
SPV’s customers employed more workers. We estimated at least 3,000 indirect jobs would be created in
the yarn manufacturing sector alone. Contribution to community development was also significant. TheCompany initiated various community development programs such as health, education, micro credit, andsocialandinfrastructure.
The Project also demonstrated positive impact on private sector development by fulfilling the global
market demand and catalyzing the growth of textile industry in Indonesia. The Project introduced hightenacity viscose fiber, which was suitable for high-speed vortex spinning process, and had enabled yarn
manufacturers to be at least twice as productive. Yarn manufacturers were motivated to expand theirspinning capacity and had invested more than $60 million in high-speed vortex spinning machines. This
was a positive response to the stagnant growth of Indonesia’s spinning industry which was hampered byPage 1 of 3

outdated machinery and lagged investment. Indonesia is now a major player in the global viscose fibermarket.

Conclusions and Recommendations
Textile in Indonesia was not considered a strategic sector and once considered a sunset industry.
However with its superior product, coupled with technical know-how and vast global network, SPV has
become a market leader and played a major catalytic role in the viscose fiber market and textile industry
in Indonesia. We learned that even though textile was seen as a sector with a stagnant growth trajectory,working with the right partner and sponsor who have the technology and the capacity might result in
positive outcomes. The development outcomes were optimized through our long-term partnership withSPV and the Sponsor. Through this study we have also found significant unanticipated effects notmeasured by the current indicators in Development Outcome Tracking System (DOTS). Despite thepositive outcomes, the Project was not set to tell the full impact story at the indicators level. Therefore it isuseful to conduct in-depth study to complement our annual monitoring exercise, and for evaluation
purposes, especially on the economic impact and private sector development of IFC’s projects.

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The findings, interpretations, views, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of theExecutive Directors of the International Finance Corporation or of the World Bank or the governments they represent.
The views expressed in this publication are those of its authors and do not necessarily reflect the views of the wider institution. Some of theinformation used in this document may come from publicly available sources such as company websites and publications. The Lessons ofExperience series does not represent a commitment by IFC to require projects it finances to take certain or all of the actions specified in thispublication. Instead, any issues arising in an IFC-financed project will be evaluated and addressed in the context of the particular circumstancesof the project.

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